No, QE II is not the name of a cruise ship; although it might as well be, given the upward ride it is providing the stock market. The Federal Reserve is expected to launch another quantitative stimulus effort in early November and the markets are rising in anticipation of that event.

On Friday, Fed Chairman Ben Bernanke reiterated that the central bank is ready to move if necessary to stimulate the economy. Investors are assuming it's a question of "when" and not "if" the Fed will move to buy additional U.S. Treasury bonds, mortgage-backed securities and whatever else they decide will provide additional impetus to a slow-growth economy.

In an election year, where the continuing high rate of unemployment and the ongoing housing mess is being blamed on the Democrats, the pressure on the Fed for a QE II must be enormous. Remember, at the end of the day, Bernanke is a political appointee, as are the members of the Fed's governing board. Sure, we would like to think that the Fed is an independent body focused solely on the economic health of America and it is most of the time.

On the other hand, if the president's wishes dovetail with what the Fed perceives to be necessary in helping the economy so much the better.

In my last few market columns, I explained that QE II was a game changer. The Fed, by promising additional stimulus, is providing investors with a "put" on the economy and therefore on the stock market. If the economy continues to grow on its own, the markets will go higher. If the economy falters, the Fed will intervene to fix it and the markets will go higher. What's not to like about that?

The arguments on whether we really do need another stimulus, will QE II really work, and will it add to the potential for more inflation down the road are consuming a forest of newsprint. In the meantime, investors are dumping the dollar (see my latest column "The Coming Currency Wars"), the markets forge steadily higher and commodities of all kinds are on fire.

As readers recall, only a month ago I raised my price target for gold to $1,350 per ounce. We have already surpassed that level and it looks like the yellow metal will hit $1,400 per ounce very soon. I'm going to have to raise my price target again but first I would like to see gold and other commodities pull back.

The dollar is key to any commodity correction. There is an inverse relationship between the dollar and commodities. The dollar may bounce over the next few weeks and if it does, that should cause commodities in general to pull back. Remember too that in the commodity arena, corrections are extremely sharp where prices can drop dramatically in a very short time.

As the S&P 500 Index flirts with the 1,180 level, I would expect a bit of resistance before the bulls make a dash toward the year's highs. The ongoing questions over housing foreclosures that have embroiled most of the banking sector this week has kept a lid on the averages. The next Fed meeting won't be until early November so any potential QEII is still weeks away. The main market moving catalyst we face is this quarter's earnings announcements. So far, company results have been a mixed bag. My advice is to let the markets pull back a bit before committing any more money to this party.

After opening the month with a 5 percent market melt-up, investors were expecting a follow-through this week that would take the averages higher. There was even talk of a possible break through the ceiling of this almost six-month trading range. Instead we only managed a couple point gain over last week's close on the S&P 500.

That was despite some "good" economic news on the unemployment front. Initial unemployment claims were down by 27,000 and continuing claims fell 2,000, the best in two months... The bears argue that not all states submitted employment numbers so optimistic estimates were used instead, in some cases. They also point out that once a person's unemployment runs out they are no longer officially counted as unemployed. The advance guard of this group (those who were left go early in the recession and still have not found a job) exhausted their extended benefits beginning in June. Unfortunately, as time goes bye, more and more unemployed Americans will fall into this category well into the middle of next year.

Over in euro land things were a bit dicier with increased concerns over European debt levels, problems with Anglo Irish Bank and the "news" that Europe's bank stress test understated lender's holdings of risky government debt. Readers may recall that I had grave reservations over this very same issue when the results were first announced weeks ago.

Most of the market's attention has turned to the Obama administration's non-stimulus, stimulus plan. That some Wall Street players got an advanced look at the administration's thinking was, in my opinion, the source of last week's rally. Now that we have the details, the markets seem to be decidedly unimpressed.

As readers recall, I explained that a good portion of the money from the first stimulus plan was deliberately held back until this summer in order to help the incumbent party get re-elected. That may have been a miscalculation on the part of the Democrats, who could have been overly confident of the economic impact of Stimulus One. To date, 77 percent of the $288 billion that was earmarked for tax benefits have been spent, only 53 percent of the $275 billion available for contracts, grants and loans has been distributed and only 64 percent of entitlements, or $144 billion out of $224 billion was doled out to the country. Obviously those levels of spending weren't enough to jump-start the economy or reduce unemployment and people (voters) are angry.

The Obama administration can read the polls as well as you or I. Since offense is always better than defense when running for re-election, the general consensus among Democrats is "we need more spending." The president's new initiatives could cost as much as $250 billion or $300 billion or slightly less than half the first stimulus plan. His agenda includes tax cuts for new business investments and R&D, $50 billion more spending on infrastructure and extending the Bush tax cuts for those Americans who make $200,000 or less ($250,000 if married).

It is not being called another stimulus plan because that might be seen as an admission that the first plan has failed. However on Friday, while addressing the nation on the economy and unemployment, the president did concede that "progress has been painfully slow." Wall Street is already discounting the package as too little, too late and they may be right. They are putting the blame squarely on the president and his party. And this country loves to find a scapegoat.

In the meantime, the markets continue to vacillate on low volume. I'm still expecting stocks to move a bit higher into the 1,130 level on the S&P 500. Only then will there be another opportunity to break out of this trading range decisively and re-take the higher ground. If stocks do succeed in breaking out, I am prepared to change my mind about my 950 S&P target level. But I'm not holding my breath.

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.